The Art of Staircasing: How to Gradually Increase Your Homeownership Share
Owning a home is a journey, and shared ownership provides a stepping stone for many on the path to full homeownership. In this guide, we explore the art of staircasing. DLUHC data shows that over the past 10 years 45,800 shared owners’ staircase to 100% ownership.
Understanding Staircasing
What is Staircasing?
If you are already a shared owner of a property with us, and you would like to own a greater proportion of your home, you can do this by purchasing additional shares. This is known as staircasing.
In more detail, staircasing is the process of gradually increasing your ownership share in a shared ownership property. As a shared owner, you begin by purchasing a percentage of the property and can later choose to buy additional shares, eventually reaching 100% ownership. This step-by-step approach allows you to increase your share at a pace that suits your financial circumstances.
The value of additional equity purchased will be based on the current market value of the property at the time of application to Staircase. The greater share you buy in your home, the less rent you pay to us. An independent RICS-qualified valuer will determine the value of your home.
Benefits of Staircasing
- Pay less rent: By increasing the percentage of the property you own; you pay less rent to us. For example, if you staircase to 100% ownership, you no longer pay the rent. It is important to remember that service charges as well as ground rent (if applicable) will still have to be paid and mortgage repayments also (if any)
- Increase in house prices: When you decide to sell your home, the greater the percentage you own, the more profit you will make if the value of your home has increased.
- More mortgage choices: If you decide to staircase to 100%, you have a wider choice of mortgage products at potentially lower interest rates, rather than a shared ownership mortgage. This could mean that the additional monthly mortgage repayment is less than the amount of rent you were paying originally.
- Freedom to sell: If you own your property outright and want to sell the property, you can sell it on the open market privately or using an estate agent of your choice. You will no longer be subject to a nomination period, or buyer restrictions. If you own a flat, you will still be a leasehold owner, and you may still have to offer it back to us first.
- Full benefit from home improvements: Becoming the outright owner allows you to maximise the profit from any major home improvements. Once you own 100% you will get back the full amount of any profit on the current market value when you come to sell your home
- Freedom to make alterations: subject to planning permission/restrictions you will be able to apply to alter your property.
How many times can I staircase?
The minimum share that you can purchase will be specified and dependent on your lease, but this can generally be from a minimum 5%. However, if you have purchased a property in 2022 onwards, you may have the new shared ownership lease which enables you to purchase 1% for the first 15 years. As a shared owner you will have been provided with a copy of your lease from your solicitor at the original sale. If you do not have a copy and require a copy of the lease, please contact us. Fees apply.
If you decide to staircase to 100%, you become an outright owner and pay no rent to us.
Purchasing additional shares
You must purchase the additional shares at a price that is equivalent to the current market value, so you will need to instruct a surveyor to value your property.
Every time you staircase, you will have expenses to pay. As well as the initial valuation costs you will also be responsible for meeting all legal fees, mortgage arrangements fees, stamp duty and additional valuations (if required).
Purchasing 1% with no admin fees
Depending on your lease, you may also have the option to staircase 1% every year for the first 15 years of your home purchase. You will be provided with your House Price Index based on the House Price Index value that is provided to you annually. The benefit of using the 1% option is that it will not be necessary to instruct a solicitor and we do not charge any admin fees. The 1% premium is all you pay.
Do I have to staircase?
Staircasing is completely up to you.
Navigating the Staircasing Process
Financial Preparation
Before embarking on the staircasing journey, assess your financial readiness. Evaluate your budget, consider potential mortgage options, and factor in associated costs such as legal fees and valuation expenses. A clear understanding of your financial landscape is crucial for a successful staircasing experience.
Professional Guidance
Engage with professionals experienced in shared ownership and staircasing. Solicitors, mortgage advisors, and housing associations like Love Living Homes can provide valuable insights and ensure that you navigate the process smoothly. Their expertise will be especially beneficial in understanding legal aspects, mortgage agreements, highlight potential challenges and speed up the process.
Valuation Considerations
The value of your home may change over time, affecting the cost of purchasing additional shares. Understanding how property valuations are conducted and anticipating potential fluctuations is essential for effective financial planning.
Buying extra shares in your property does incur added costs. You are responsible for meeting the valuation costs and any other costs incurred in connection with the staircasing transaction i.e. legal costs for your solicitors, legal costs for us, (if you withdraw before completion), mortgage arrangements fees, stamp duty, and additional valuations.
Mortgage Availability
Check with mortgage providers about the availability of financing for staircasing. Some lenders may have specific products designed for shared ownership, and exploring these options can help you make informed decisions about your mortgage arrangement.
If you are re-mortgaging, this would also be a good time to consider staircasing. Mortgages can only be used for more funding towards the property and must not be used for decoration/debt consolidation.
Your staircasing Journey at a glance
See our guide for more information.
What you need to know for your building insurance after completion
If you become the 100% owner of a house, you will no longer be covered under our block buildings insurance policy from the date your staircasing transaction is completed. You must ensure that you have a building insurance policy in place at completion.
If, however, you become a 100% owner of a flat, you will still be covered under our block insurance policy and contribute towards this with your monthly service charge. If we do not own the freehold of the block, you will then be covered under the freeholder’s block building insurance policy.
Celebrating Full Homeownership
Reaching 100% Ownership
The culmination of your staircasing journey is reaching 100% ownership. Celebrate this achievement as you officially become the sole owner of your home. Enjoy the benefits of full homeownership, including complete control over your property. You will still have to pay the service charge and may have to pay an annual ground rent depending on your lease/property.
Future Planning
With full homeownership achieved, consider your future plans. Whether it’s staying in your beloved home or exploring new opportunities. Having complete control over your property allows you to shape your future according to your aspirations.